ReneSola Ltd (SOL) Q4 2012 Earnings Call Transcript

Anthony Hung - Vice President of Capital Markets Juliet Yang Henry Wang - Chief Financial officer Xianshou Li - Chief Executive Officer and Director

Brandon Heiken - Crédit Suisse AG, Research Division Matt Koranda - Roth Capital Partners, LLC, Research Division Timothy Lam - Citigroup Inc, Research Division Pranab Kumar Sarmah - Daiwa Securities Capital Markets Co. Ltd., Research Division Amy Song - Goldman Sachs Group Inc., Research Division

Hello, ladies and gentlemen. Thank you for standing by for ReneSola Ltd.'s Fourth Quarter and Full Year 2012 Earnings Conference Call. [Operator Instructions] As a reminder, today's conference is being recorded. I would now like to turn the call over to your host for today, Mr. Tony Hung, ReneSola's Vice President of International Corporate Finance. Please proceed, Mr. Hung.

Hello, everyone, and welcome to ReneSola's Fourth Quarter and Full Year 2012 Earnings Conference Call. ReneSola's earnings results were released earlier today and are available on the company's website as well as our newswire services. You can follow along with today's call by downloading a short presentation available on the company's website at www.renesola.com. On the call today are Mr. Xianshou Li, our Chief Executive Officer; Mr. Henry Wang, our Chief Financial Officer; and Ms. Juliet Yang, our IR Manager. Ms. Yang will discuss ReneSola's business highlights and strategy, and Mr. Wang will go through the financials and guidance. They will all be available to answer your questions during the Q&A session. Before we continue, please note that today's discussion will contain forward-looking statements made under the Safe Harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements involve inherent risks and uncertainties. As such, the company's results may be materially different from the views expressed today. Further information regarding these and other risks and uncertainties are included in the company's annual report on Form 20-F and other documents filed with the U.S. Securities and Exchange Commission. ReneSola does not assume any obligation to update any forward-looking statements except as required under applicable law. Before I turn the call over to Ms. Yang, please be reminded that unless otherwise noted, all figures mentioned during this conference call are in U.S. dollars. It is now my pleasure to introduce Ms. Juliet Yang, who will give an overview. Please go ahead, Ms. Yang.

Thank you for joining today's earnings call. If you have downloaded our presentation, please turn to Page 4 for our company highlights and see Page 11 for a snapshot of our financial progress. We performed well given the market conditions of the fourth quarter of 2012. We delivered record shipments last quarter, with a huge increase in shipments of our solar modules. Our rigorous sales and marketing efforts along with numerous recent third-party certifications led many new customers to recognize the high-quality and the efficiency of our solar modules. During the fourth quarter, we saw increased module demand from several key markets, including China, which offers considerable potential. Increased module sales, which generate higher margins compared to our wafer sales, combined with our ability to continue driving down production costs helped us achieve a positive gross margin of 3.3% in the fourth quarter. At the same time, however, declining ASP resulting from the solar market demand supply imbalance, along with the competitive pricing, continued to have a significant impact on our business and the industry. While we believe ASPs are beginning to stabilize, we will work hard to keep lowering our cost, improving operating efficiency and develop technologically advanced products that will generate new opportunity in the marketplace. I will now quickly review our shipments. Total solar shipments in fourth quarter of 2012 were 713.2 megawatts, an increase of 33.9% from 532.8 megawatts in the third quarter. Wafer shipments increasing slightly quarter-over-quarter, while module shipments increased 120.6% to 320.5 megawatts as a result of seasonal strong year-end demand, particularly in China, and the increasing competitiveness of solar power as a power source. Full year 2012 shipments rose to a record 2.2 gigawatts, an increase of 72% -- 70.6% from 1.3 gigawatts for the full year of 2011. The increase in shipments was as a result of strong demand for both our solar wafers and modules, especially our Virtus products. ASPs dropped significantly throughout the year, with wafer ASPs dropping to $0.24 per watt and module ASPs dropped to $0.63 per watt in the fourth quarter. This compares to $0.24 per watt and $0.67 per watt in the third quarter of 2012 and $0.36 per watt and $0.97 per watt in the fourth quarter of 2011. Despite our large increasing shipments, the substantial decline in ASPs resulted in relatively flat full year revenues. In the fourth quarter, however, revenues were $306.5 million, up significantly from $218.2 million in the third quarter due to a higher number of module shipments, especially from China, as well as a lower rate of decline in ASPs. Since the end of the year, wafer ASPs has risen slightly and as noted, we believe module ASPs are stabilizing. Please turn to Slide 6 for an update on our R&D effort. ReneSola continue to invest in R&D in Q4 2012 to improve the technology behind its products and manufacturing. On wafers, the company's next-generation Virtus A+++ wafer with an average efficiencies of 17.6% to 17.8% are now in trial production. Our modules, the company's 60-cell 260 watt Virtus II modules with efficiency of 16% are now also in trial production, and the company's 60-cell 260 watt Virtus I modules are now in full production. ReneSola is also currently developing a frame-integrated, second-generation Micro Replus, which is expected to reduce cost to ReneSola's customer by 20% compared to the first-generation model. The company also aims to provide it's DC optimizer product in the second half of 2013 and continue to research small-scale storage systems with a plan to market such product by the mid-2013. ReneSola is also developing a PV home kit solution with a plan to market by mid-2013. Please turn to Slide 7 for an overview of our module business results for the quarter. Our module business performed exceptionally well in the fourth quarter and for the full year of 2012. We focused on building our module business over the past year and boosted our sales and marketing efforts with hiring experienced and localized sales team. We also opened new offices in key markets like the United States, Japan and the APMEA region. By leveraging our leading wafer technology, third-party certified modules and on-the-ground international presence, we have built up the ReneSola brand and expand our module business substantially. In 2012, we provided solar modules to the customers in the United States, China, Greece, Australia, India, Germany and Italy. Our module shipments were up 120.6% sequentially in the fourth quarter and up 153.9% year-over-year. Nearly all of our fourth quarter shipments were Virtus modules, up approximately 215.1% quarter-over-quarter. In the first quarter of 2013, we expect to increase our module shipments to a range of 280 megawatts to 300 megawatts. Although the overall market remains oversupplied, we are operating at 100% capacity as we continue to win new business. For the full year of 2013, we expect our total solar module shipments increase to a range of 1.4 gigawatts to 1.6 gigawatts. We will not expand our solar module capacity, but may instead outsource some production to third parties under ReneSola's supervision and brand and in compliance with localization rules in some jurisdictions. Our module processing cost decreased in the fourth quarter to $0.60 per watt compared to $0.65 per watt in the third quarter. In combination with low ASPs, this result in a gross margin of approximately 4.7% of our module business, up from approximately 1% in the third quarter. In the first quarter of 2013, we expect our total solar module production cost to decrease to approximately $0.50 per watt -- $0.55 per watt. We expect to continue to drive down costs and deliver similar or improved margin for our module business going forward. Please turn to Slide 8 for an overview of our wafer business result for this quarter. Although ASPs has weakened our wafer business margin, we continue to lead the industry in terms of wafer technology and processing cost. In the fourth quarter, wafer processing cost decreased to $0.12 per watt, down from $0.50 -- $0.15 per watt in the third quarter of 2012 as a result of the improvement in our manufacturing methods as well as reduction in material costs. We expect to lower wafer processing cost of our Virtus A++ manufacturing facility to $0.11 per watt by the end of first quarter. With ASPs now rising slightly, we expect to improve our margin for our wafer business to become more profitable once polysilicon price stabilize. We expect our wafer capacity to remain constant at 2 gigawatts. Please turn to Page 9 for an update of our polysilicon production. We only produced about 323 metric tons of polysilicon in the fourth quarter of 2012 as a result of the temporary halt of polysilicon production in the end of October 2012 to upgrade our facilities and equipment as well as to integrate Phase 2 polysilicon production with Phase 1. Combined production for the newly integrated polysilicon plant is now in trial production. Our total production -- polysilicon production capacity is currently 10,000 metric tons. Polysilicon production cost was approximately $23.50 per kilogram at the end of October 2012 compared to approximately USD 23.57 per kilogram at the end of Q3 2012. We expect our polysilicon production cost to be approximately USD 18 per kilogram by the end of second quarter of 2013. We look forward to restoring our polysilicon production as it plays an important role in reducing our overall wafer production cost and shielding us from the market volatility. I would now like to turn the call over to Henry, who will discuss our financial results for the quarter.

Thanks, Julie. Please turn to Slide 11 through 14 for a look at our financial progress. As Julie mentioned earlier, we were able to deliver a positive gross margin of 3.3% in the fourth quarter, largely due to increased sales of solar modules as a percentage of our revenue. At the same time, we continue to drive down our production cost for both modules and wafers to levels that we are among the lowest in the industry. Our ability to constantly lower cost has allowed us to minimize margin loss brought about by the decline in ASPs and will better position -- further better position us once market conditions stabilize. I will now review details of our financial results. Net revenues for the fourth quarter of 2012 were $306.5 million, exceeding our guidance and representing a sequential increase of 40.5% from $218.2 million despite a decrease in the ASPs of solar wafers and modules from $0.28 per watt and $0.67 per watt, respectively, to $0.24 per watt and $0.63 per watt, respectively. As a result, we have a significant increase in solar module shipments, particularly to China. Gross profit for the fourth quarter of 2012 was $10.3 million compared to a gross loss of $39.2 million in the third quarter, primarily due to increased sales of our solar modules, which have higher margin than those of our wafer business and is due to the inventory write-down of USD 31.6 million recorded in quarter 3 2012 to reflect the decline in the price of solar wafers and polysilicon. For full year 2012, gross loss was USD 35.7 million compared to a gross profit of USD $96.1 million in 2011. The year-over-year decrease was primarily due to the declines in solar wafer and module ASPs, as well as new inventory write-down to reflect the significant drop in the prices of polysilicon, wafers and the modules. Gross profit for the full year 2012 would have been $23.7 million without the impact of inventory write-down. Gross profit margin for the fourth quarter was 3.3% compared to a gross margin of negative 18% in the third quarter. Full year 2012 gross profit margin was negative 3.7% compared to gross margin of 9.7% in 2011. Operating loss for the fourth quarter 2012 was $23.8 million compared to an operating loss of $20 million -- of $82.8 million in the third quarter. Total operating expenses for the fourth quarter was $34 million, down 20% from $43.6 million in the third quarter. The sequential decreases in operating expenses was primarily due to the impairment loss on long-lived assets of $6.1 million recorded in the third quarter for the discontinuation of 200 megawatts of monocrystalline wafer furnace production capacity and the goodwill impairment charge of $5.8 million recorded in the third quarter for our solar cell and module business, acquisition in 2009, offset by an intangible asset impairment loss of $3.8 million to reflect a decrease in the value of business license for our Sichuan polysilicon plant and normalizing our research and development expenses after we have decreased our R&D expenses in Q3 2012 to save costs. Operating expenses represented 11.1% of total revenues in quarter 4 compared to 20% in the third quarter. Full year operating loss was $179 million compared to an operating income of $11.5 million in 2011. Full year operating expenses were $143.3 million, about a 70% increase from $84.5 million in 2011. The increase in operating expenses was primarily due to an increase in sales and marketing expenses in conjunction with the expansion of our business outside of China, an increasing in general and administrative expenses as a result of our increased headcount associated with the expansion of our module business and a onetime gain of USD 13.5 million recorded in 2011 for the forfeiture of a prepaid deposit due to the breach of a solar wafer contract by one of our clients, as well as the impairment loss on long-lived assets of $6.4 million and a goodwill impairment charge of $6.2 million in 2012. Operating expense represented 14.8% of the total revenue in 2012 compared to 8.6% in 2011. Operating margin for fourth quarter of 2012 was negative 7.8% compared to an operating margin of negative 38% in the third quarter. Full year operating margin was negative 18.5% compared to an operating margin of 1.2% in 2011. Net loss attributable to holders of ordinary shares for fourth quarter of 2012 was $49.8 million compared to a net loss of $78.6 million in the third quarter. This represents a basic and diluted loss per share of $0.29 and basic and diluted loss per ADS of $0.58. This loss was impacted by $16.7 million impairment of deferred tax assets. If not, we log the impact of deferred tax assets impairment, goodwill impairment and business license impairment, net in all, so fourth quarter would have been $29.8 million. Net loss attributable to share -- to holders of ordinary shares for the full year 2012 was $203.4 million compared to a net income of $0.3 million in 2011. This represents basic and diluted loss per share of USD 1.20 and a basic and diluted loss per ADS of USD 2.40. Net loss attributable to holders of ordinary shares of 2012 would have been $102.5 million if not for impact of the inventory write-down impairment and the temporary halt of our Sichuan polysilicon plant. On the balance sheet, at the end of year 2012, we had overall debt to $890.2 million (sic) [$790.2 million], excluding $111.6 million in convertible notes. Total bank borrowings decreased by about $16 million sequentially at the end of the fourth quarter. Our net cash and cash equivalent position plus restricted cash was $268.1 million at the end of the fourth quarter compared to $335.2 million at the end of third quarter. Our net cash flow in fourth quarter from operating activities was $25.8 million compared to a negative cash flow of $46 million in Q3 2012. We expect to spend about USD 60 million this year to complete our polysilicon production capacity, as well as to maintain and upgrade our existing business. Please turn to our guidance, which can be founded on Page 15. For the first quarter 2013, we expect the total solar wafer and module shipments to be in the range of 260 megawatts to 280 megawatts (sic) [660 megawatts to 680 megawatts], with solar module shipments expected to be in the range of 280 megawatts to 300 megawatts. Revenues are expected to be in the range of $260 million to $270 million, and gross margin are expected to be positive. For the full year 2013, we expect total solar wafer and module shipments to be in the range of 2.7 gigawatts to 2.9 gigawatts, with solar module shipments expected to be in the range of 1.4 gigawatts to 1.6 gigawatts. At this time, we are happy to take your questions. Operator, please.

[Operator Instructions] First question comes from the line of Satya Kumar from Crédit Suisse. Brandon Heiken - Crédit Suisse AG, Research Division: This is Brandon Heiken speaking on behalf of Satya Kumar. I was wondering if you could talk about your thoughts on cost reductions for the rest of the year. I know you guided the first quarter cost, but if you could talk about the rest of the year and what you think prices may do also for the rest of the year. And then my second question is about your cash balance. It looks like it's down quite a bit in the fourth quarter, and restricted cash is up quite a bit. I just wanted to check if everything is okay with your loan facilities and if you have any plans for raising capital or other capital allocation.

Yes, I guess, Brandon, before we get into your question, I mean, obviously we can't talk about any capital raising plans per se, but safe to say that we have the support of our local banks, and we will work with our local banks here in China. And now let me go ahead with your questions. [Chinese]

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Brandon, with regards to the cost, when we look at the overall situation, it seems that it really can't go that much lower. I think we very much hit the limit. So right now, our non-poly processing cost is something like $0.44, $0.45, and that may very well be the limit in where it's at for the rest of the year. In terms of the ASPs, as you well know, in recent months it's been pretty stable, has even gone up. And we think for the full year trend, it might go up further. And now let me direct your second question to the team. [Chinese]

Okay. So let me explain a little bit about our cash position. Actually, at the end of last -- in the last quarter, we retained about USD 60 million back to the bank. And there also, additionally, some CapEx payment in the last quarter. But we maintain a good relationship with our local banks, and we can get -- we still have some bank facility to be there. So if we need the money, we can still can get the borrowing from the banks, and they also give us a great support for our business.

Yes, I think, Brandon, a little bit I'd like to add to Henry's comments, is you will probably also notice that in Q4 actually, we were operating cash flow positive, and as a company, we consistently give out cash flow numbers. So we try to be very open and transparent about this. And the big picture is, if you look at our overall numbers in the fourth quarter cash flow, I think we were about EBITDA neutral and again, we've got operating cash flow. And I think depending on where poly and other things go, our trends may only improve.

The next question comes from the line of Philip Shen from Roth capital. Matt Koranda - Roth Capital Partners, LLC, Research Division: This is Matt on for Philip. Just wanted to get a sense for guidance for 2013, maybe a little bit more granular here. I know you said 2.7 to 2.9 gigawatts. Where's most of the growth coming from for 2013?

Thanks, Matt. I think in terms of the granularity, first, it might be worth pointing out how that breaks down before wafers and modules, so that may help with the modeling. Let me check with the team on your question. [Chinese]

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Oh, okay. [Chinese]

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[Chinese] Okay. Yes, Matt, in terms of modules, and then we'll get into wafers a little bit, we think that it's going to be very, very balanced growth overall for us. So something like 200 megawatts in both the U.S. and Japan. So 200 megawatts each in those 2 countries. 100 megawatts or so in Australia, 200 megawatts out of India and then something like 500 megawatts out of Europe. And then for China, maybe something like 100, 200 megawatts, maybe some upside to that. And let me check with the team on the wafers. [Chinese]

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And for wafers, it will primarily be Korea, Taiwan and India. So it will actually be a lot of exports this year. Matt Koranda - Roth Capital Partners, LLC, Research Division: Okay. Great. And just one more, if I may. We'd like to get a sense for what your normalized OpEx looks like in 2013. So could you kind of explore where could overall OpEx come in, in 2013? And also, can we expect any additional impairment charges during the year?

I think overall OpEx, and let me double check with Henry on this, per quarter, I think the normal number would be under $35 million...

Yes.

$30 million, $35 million, that's correct. So I think in terms of our overall position, that will probably be the norm going forward. In terms of impairment charges, I think this is a perhaps a question for our auditors, but let me double check with Henry as well on this. Basically, as long as the ASPs don't drop anymore, as long as they stabilize, then the assets won't be impaired, and we're not going to have any more impairment or write-offs if the ASPs are constant, right?

No, yes.

Yes, that's right. So yes, I think basically, you can see from the ASPs what the likely impairment charges or write-offs will be, not just for us, but for everyone.

Your next question comes from the line of Tim Lam from Citigroup. Timothy Lam - Citigroup Inc, Research Division: My question -- 2 questions for me. First is the question about the increase in the shipment in modules. You mentioned about the 2013 target, but can you shed some light on where the shipment demand is in for the fourth quarter 2012 and whether there will be some orders that have not been fulfilled that will be completed in the first quarter for some of these orders that were done in the fourth quarter? That's the first question. And the second question is regarding your cost reduction. It looks like for both wafer processing cost and module processing cost, there was a significant reduction in fourth quarter. Could you highlight to us where -- what is causing that cost reduction and whether the company has plans for some other technology upgrades on both the wafer production or module production?

Sure. I think in terms of your first question, and the second question, I might need some additional clarity from the them. But in terms of the first question, in the fourth quarter, as we mentioned, a lot of the demand came out of China, I think close to half on the module side. And let me check with the team on the second part of your question, whether there's any leftover orders in the fourth quarter. [Chinese]

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Yes, Tim, I think you understood that. So there might be something like 50 or 100 megawatts of orders or thereabouts from the fourth quarter that, if you will, are now in the first quarter being executed. Now on your second question, let me just get a bit of a clarification. You're asking if we are looking at potentially other new technologies to reduce cost further? Timothy Lam - Citigroup Inc, Research Division: Well, I'm asking the fourth quarter cost reduction, where the cost reduction came from in the fourth quarter and also if company will see some other technology investment to help lower the cost of either the wafer or for modules?

Okay. [Chinese]

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Okay. I think, Tim, you understood that. But overall, yes, in terms of technology, in terms of the management, some of the operations, we improved that significantly to change the wattage and also lower overall our non-processing cost. You might also note that we have been moving to the Virtus A++, the next generation of wafer conversion technology. And in our PowerPoint, we also note that we're experimenting with Virtus A+++. So hence, that will lower the costs even further. Timothy Lam - Citigroup Inc, Research Division: And sorry, if we could follow-up slightly on this. I'm asking specifically on the wafer processing cost because does that mean that you're cutting thinner wafers or are you finding different ways to do the wafer production to -- in order to lower the cost [indiscernible] for wafer manufacturing?

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Okay. So Tim, I think you understood that. It's actually not cutting it thinner. It's more the manufacturing technology and process, the Virtus A++ and in the future, the Virtus A+++.

The next question comes from the line of Pranab Sarmah from Daiwa Capital. Pranab Kumar Sarmah - Daiwa Securities Capital Markets Co. Ltd., Research Division: Actually, I have a little bit follow-up on your Virtus A+++ wafer. On this product, do you need to invest on any new equipment? If so, how much would be your total investment could be to upgrade your 2-gigawatt capacity to, say, Virtus A+++ compatible?

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Actually, Mr. Li said in terms of technology, once it's okay, we'll definitely be upgrading all our multi-capacity. But in terms of the cost, it should be minimum. We should be able to keep it under control. It shouldn't exceed, say, USD 10 million. Pranab Kumar Sarmah - Daiwa Securities Capital Markets Co. Ltd., Research Division: And so just with USD 10 million, you'll be able to upgrade almost like major capacity to Virtus A+++ compatible, right? That's...

Exactly. So no new equipment. It's upgrading the existing equipment. Pranab Kumar Sarmah - Daiwa Securities Capital Markets Co. Ltd., Research Division: Very good. Okay. And the next question is on your guidance. You have given 1.4 to 1.6 gigawatt for module shipments this year, 2013. Can you give a little bit of geographical breakdown, like where you have contracts and how much contract do you have in which area?

Yes. I think we gave the geographic breakdown a little bit earlier. So it's 200 megawatts in the U.S. and Japan each, something like 100 megawatts in Australia, 200 or so in India and 500 in -- out of Europe altogether, and then maybe 100, 200 out of China, maybe there's some upside to that. But let me double check with the team for you on your second question, whether or not we've got a lot of contracts otherwise in place. [Chinese]

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Yes, I mean, in terms of real contracts, maybe there aren't any long-term contracts or shall we say orders of that kind, but there are definitely a lot of orders. And actually right now, we are completely sold out until the end of June. So I think it's definitely looking very strong, and we're feeling pretty confident about the numbers. Pranab Kumar Sarmah - Daiwa Securities Capital Markets Co. Ltd., Research Division: Okay. And my last question is on, Tony, on this China is planning to cut some of their feed-in tariff as the new flow has come. After the news flow, have you seen any reactions from your customer like they are now delaying some of the order for China delivery? Or any type of movement you have seen over the last few days?

Sure. Let me check with the team on that. [Chinese]

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Pranab, sorry, we might not be actually the best guys to talk about this. We've dealt with the Chinese market a little bit less. So overall, perhaps we don't get as good a perspective on this. But based on what Mr. Li has seen, we believe that actually, in fact, there's going to be rush orders, so similar to elsewhere in the world.

[Operator Instructions] Next question comes from the line of Amy Song from Goldman Sachs. Amy Song - Goldman Sachs Group Inc., Research Division: I just have a follow-up question on pricing, maybe I missed this early. So since you have a pretty good, like, visibility, as you said, totally sold out up to June with pretty clear geographic coverage breakdown. So what is the ASP outlook you see from now? Seemed like that you only have 100 to 200 megawatts selling into China, which is the lowest pricing market. So you probably could give a pretty clear guidance of what the pricing in the next few quarters, right?

Thanks for your question, Amy. Let me check with the team on that. [Chinese]

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Amy, I think you understood that, but for the sake of everyone else on the call, so Q1 will probably be about the same as Q4, maybe a little bit lower. I think in terms of Q2, might be $0.02, $0.03 higher. After that, it's very, very uncertain because of the countervailing duties out of Europe. So it's going to be fairly hard to say. Europe might become higher, but it's also safe to say that, that market will come under different types of pressure. Amy Song - Goldman Sachs Group Inc., Research Division: Okay. The other question I have is regarding your cost structure, especially on the polysilicon side. Seem like you sort of a little bit postponed guidance from last quarter, postponed to second quarter ramp-up -- to fully ramp up the capacity, cutting costs to $18 per kilogram. So can you break down by 2 -- by between these 2 phases of capacity to you -- plant by plant, what exactly the cash cost you see for Phase 1 and Phase 2 and the ramping up of schedule, what should we expect? Is it 3 to 6 months turnover or 2 to 3 months for different plants? Can you talk about that?

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Okay. Amy, I think you understood that. So in terms of the phases, the entire integration work will make the 2 phases indistinguishable from each other. They'll be combined and hence, it will be $18 per kilogram once fully ramped up for both phases combined, which I think going forward maybe we'll just refer to as one phase or our polysilicon plant in Sichuan. The cash cost will be under $15 and to get to the $18 and the $15 cash cost, we figure it will take 2 to 3 months to ramp-up, and the learning curve will be as long as that. Amy Song - Goldman Sachs Group Inc., Research Division: Okay. Great. One last question regarding some other smaller capacity, post the Chinese New Year, have you ever seen more smaller capacity starting to reoperating due to the strong flow that we're seeing right now? And how do you view the polysilicon price? And under this scenario, maybe let's say despite the potential poly tariff outcome, just based on the short-term basis, can you give us some color on that?

Sure. Let me break your questions up into 2 questions. [Chinese]

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Okay. I think you understood that, Amy. So on the first question that you had on the smaller capacity, we think there should be some actually coming back online. [Chinese]

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Okay. Yes, so I think, Amy, you understood that, but for the sake of everyone else on the call, Mr. Li thinks that right now we've reached a temporary high at around 18 or 19. And at this point, given the nature of the Chinese countervailing duties on poly or rather the lack of specifics at this time, whether or not this will count towards, for example, poly imported for export and exactly what form these policies will take, it's very, very difficult to say what will happen on the poly price.

[Operator Instructions] Thank you very much. This concludes today's conference call. Thank you for your participation. You may now disconnect the lines.

Thanks. Bye.